A bridge to green growth

The President of the European Commission, Ursula von der Leyen,
has launched the European Green Deal – an extensive growth strategy with the goal of
making Europe the world’s first climate-neutral continent by 2050. While most European countries are trying to achieve major emission cuts in electricity production, Norway already has clean hydropower. That means we have to think differently. Instead we have to make cuts in emissions from mobility, agriculture, heavy industry, and from oil and gas production.

Although our clean energy supply situation makes it difficult to achieve domestic climate cuts, the Paris Agreement and the EU’s climate strategy provides new opportunities for technological innovation and value creation. Norway’s unique position gives us both advantages in the green transition, but also some additional challenges.

We need to reach larger markets

To build large companies you need a large customer base. The path from technology development to commercialisation usually happens through the domestic market. Although Norway is a part of a European and international market, there are significant barriers to growth when developing a new business from Norway, compared to being located in the heart of Europe.

Norway is a long country in the northern corner of Europe with just over five million people. We are geographically spread out and far apart. Flying from Stavanger to Tromsø easily takes six hours, and travelling from Stavanger to Oslo by train will take eight hours. By contrast, EU has over 500 million people and you can quickly reach all the major business cities, be it Paris, Brussels, Berlin, or London. The train between Paris and London only takes about two hours!

Competitive advantages

While our small domestic market might make commercialisation and growth more difficult, we do have a competitive advantage now that Europe is developing a climate-neutral continent. Our distinctiveness becomes a competitive advantage.

One of Norway’s most important advantages is our renewable energy sources, followed by our extensive maritime competence, and our knowledge-based society. As the sovereign climate investment company, we meet a lot of international companies who consider Norway to be an exciting location for power intensive, clean industry. To achieve Ursula’s carbon neutral Europe we need to develop, build and scale clean electricity, green data storage, the hydrogen value chain and carbon storage and carbon capture technologies, among others. We need to lower the cost of floating offshore wind energy, ocean solar energy and harvest from the sea sustainably.

Intellectual Capital Pathways

Norway can offer all this and more. As companies reach their commercialisation phase, more venture capital is needed, in addition to pathways into larger markets. This kind of venture capital is underrepresented in Norway. By attracting international co-investors and funds with extensive international technology networks, we can build competent capital pathways to the rest of the world.

Direct contact and trust

To a much greater extent than listed investments, private venture capital investments are all about trust and networks. Trust in management teams carrying out the hard work it takes to build profitable technology companies. Networks to other investors who contribute with capital and knowledge. In Nysnø we are therefore very active on the international arena, creating direct contact with other investors and companies. We made our first international fund investment in ArcTern Ventures – a Canadian venture capital firm investing in technology companies who provide solutions to challenges related to climate change. We have also started a close co-operation with Energy Impact Partners. EIP is a global investment platform leading the transition to a sustainable energy future. EIP brings together entrepreneurs and the world’s most forward-looking utilities and operating companies to advance innovation.

Both Tom Rand, Co-founder and Managing Partner of ArcTern and Dr. Peter Fox-Penner, Chief Strategy Officer at Energy Impact Partners and professor at Boston University,
participated at the Driva 2020 event and gave talks about increased climate action and new business opportunities that arise in a decarbonized, decentralised and electrified energy system.

The ambitious European energy and climate policies increases the relevance for international players like ArcTern and EIP, and both organisations will be based in Norway. Kristin Aamodt will head the Arctern Europe office from Oslo and EIP is currently seeking a Vice President for Europe to be based in Norway. With local presence like this we can create an efficient ecosystem for climate venture capital in Norway and build capital bridges that act as pathways to larger markets.